February 13, 2017

The Technology-Trade Tension

Omar Ahmad Al-Ubaydli

Senior Affiliated Scholar
Summary

How can we reconcile embracing technological progress with expressing suspicion toward free trade? 

"Such then is the human condition, that to wish greatness for one's country is to wish harm to one's neighbors," reflected the French philosopher Voltaire. This adversarial perspective toward foreign relations is alive and well today, as evidenced in the Brexit vote and the U.S. presidential elections. And while anti-free-trade sentiment is mainstream, it's worth reflecting upon how difficult it is to reconcile pro-protectionism with the near-universal love of technological progress.

To understand why economists generally extol free trade, note that in the beginnings of civilization, before the development of currency and formal trade, households were responsible for producing all of the goods and services that they would consume, such as food, clothing, entertainment and so on.

Household-level self-sufficiency is terribly wasteful compared to the alternative – specializing in the production of certain goods and trading the surplus for the goods produced by others. Let food production be the exclusive domain of a few farmers, allow others to focus on making clothes and designate a singer to keep everyone happy after work. The result is more goods produced in total.

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